Custom, Excise & Service Tax Tribunal
M/S Bharat Heavy Electricals Limited vs Cc&Ce, Meerut on 30 June, 2008
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST BLOCK-II, R.K. PURAM, PRINCIPAL BENCH, NEW DELHI, COURT NO. III Excise Appeal No. 6160 of 2004 [Arising out of Order-in-Original No. 18/COMMR/MRT-I/2004 dated 22.09.2004 passed by the Commissioner, Customs & Central Excise, Meerut] Date of hearing/decision 30.06.2008 Honble Mrs. Archana Wadhwa, Member [Judicial] Honble Mr. M. Veeraiyan, Member [Technical] 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether Their Lordships wish to see the fair copy of the Order? 4 Whether Order is to be circulated to the Departmental authorities? M/s Bharat Heavy Electricals Limited Appellant [Rep. by Mr. Z.U. Alvi, Advocate] Vs. CC&CE, Meerut Respondent [Rep. by Mr. V. Chaudhary, Jt. CDR] Coram: Honble Mrs. Archana Wadhwa, Member [Judicial] Honble Mr. M. Veeraiyan, Member [Technical] O R D E R
Per: M. Veeraiyan:
This is an appeal against the order of the Commissioner dated 22.09.2004.
2. Heard both sides.
3. The relevant facts, in brief, are as follows:-
a) The appellant undertakes design, manufacture and supply various heavy and sophisticated electrical, mechanical & electronic equipment meant for generation, transmission, conservation and utilization of electric power.
(b) They entered into contracts with Electricity Boards, NTPC, NHPC etc. for supply of such machineries; they also entered into separate contracts for undertaking transportation of such equipments indicating the freight charges at lump-sum rates and raised bills for the said amounts on customers.
(c ) Commissioner, in the impugned order, found that the applicant has not indicated in their invoices separately freight charges and accordingly held that the freight charges require to be added for the purpose of determining assessable value. On the above finding, he has demanded Rs. 1,49,75,487/- in relation to eight NTPC contracts relating to the period from 01.07.2000 to 28.02.2003 and also imposed equal amount of penalty.
4. Learned Advocate submits that freight actually incurred by them is, in fact, higher than the amount actually collected by them, from their customers. He submits that this fact has been noted in the order of the adjudicating authority as well. In this connection, he draws our attention to the gist of the submissions as recorded by the Commissioner in sub-para 2.5 of para 13 of the order in original to the effect that the actual freight paid was more than the amount of freight billable under the contract to the customer. He also submits that the sales are for delivery FOR factory and, therefore, they are eligible for the abatement of the freight. He also relies on the decision of the Bangalore Bench of the Tribunal in their own case in Excise Appeal No. 973 of 2002 vide order No. 1017 of 2004 dated 03.06.2004.
5. Learned DR submits that the sale is complete only when the goods are delivered at site, therefore, for claiming abatement of the freight they should have indicated the said freight amounts in the invoices. In view of this, he submits the order of the Commissioner requires to be upheld.
6. We have carefully considered the submissions. The stipulation that freight amount should be indicated in the invoices separately is precautionary provision with a view to ensure that an assessee does not deduct amount in excess of the freight and thus artificially reducing the assessable value. In the present case, admittedly, the assessee is incurring more towards freight than the amount they are actually collecting from their customers. The freight amount collected is based on a separate contract and accordingly separately billed. It is not the case of the Department that no freight is incurred in transporting such heavy machinery. It is not the case of the Department that the assessee is claiming inflated amount as freight. In fact, it is the other way about i.e. they are collecting less than what they are actually incurring. The Tribunal in the appellants own case in Excise Appeal No. 973 of 2002 vide order No. 1017 of 2004 dated 03.06.2004 has decided the issue in favor of the appellant.
7. Under these circumstances, we are not able to uphold the order of the Commissioner. We set-aside the order and allow the appeal with consequential relief.
[Operative part of the order pronounced in the open Court] [Archana Wadhwa] Member [Judicial] [M. Veeraiyan] Member [Technical] [Pant]